Sonora Water Wars
Profile of Mexico’s Mining Giant
Mexico's mining giant / Photo by Tom Barry
Lines of Business and Subsidiaries
Grupo México has three major lines of business: mining, transportation, and infrastructure. Related firms include: Mining: ASARCO (with mining operations in Arizona and Texas), Americas Mining Company, Southern Copper Company, Silver Bell Mining; Transportation: Ferromex, Ferrosur, Intermodal; and Infrastructure and Engineering: Perforadora México, México Compania Constructora, and Consutec.
Grupo México is the world’s third largest copper company, and holds more copper reserves than any other company. In 2012 the company announced a $7 billion plan to expand its copper operations in Mexico, United States, and Peru. The company projects that it will produce 672,400 tons of copper and a record-breaking 21,500 tons of molybdenum in 2014. Its
Grupo México reports that Buenavista mining operation in Cananea holds more copper reserves than any single mine in the world, and is currently undergoing a $3.4 billion expansion. Its La Caridad operations constitute “the most complete mining-metallurgy complex in Mexico, producing more than 120,000 tons of copper annually as well as large quantities of molybdenum, gold, and silver. By 2017 Grupo México projects that the company will be producing 87% more copper – in large part due to the continuing expansion of Buenavista operations – for total of 1,175, 000 tons.
Copper Operations Across the Border
A holding company, Grupo México owns ASARCO, the Tucson-base mining, smelting, and refining corporation for copper and molybdenum. In the United States – through its ASARCO subsidiary – Grupo México’s operations include:
* 3 open-pit copper mines in Arizona (Mission, Ray, & Silver Bell).
* 1 copper smelter in Hayden, Arizona.
* 1 copper refinery and precious metals plant in Amarillo, Texas.
Unsafe Working Conditions
The Sonora River environmental disaster in August 2014 cemented Grupo México’s reputation as one of the country most irresponsible mining companies. Eight years previously, the death of 65 in February 2006 from methane leaks at the Pasta de Conchos coal mine in Coahuila, also not far from the U.S. border. Prior to the catastrophe, Grupo México miners had gone on strike 14 times, complaining each time about unsafe conditions and methane leaks. The 2006 mining disaster sparked national outrage, but the Mexican government never penalized the corporation.
Sulfuric acid being transported by Ferromex for Grupo México / Photo by Tom Barry
Man Behind the Company
Grupo México is owned largely by one of Mexico’s richest men: the secretive Germán Larrea Mota-Velasco, whose fortune is estimated by Forbes to exceed 16 million pesos. Larrea, the president of the company’s board of directors, is also a principal in Grupo Televisa and Grupo Financiero Banamex.
On the Rails
Ferromex is Mexico’s dominant railway company (having bought Ferromex in 2005). At five U.S.-Mexico border crossings, Ferromex connects with U.S. railway companies that financially partner with the company, including Texas Pacifico Transporation (owned by Grupo México) and Union Pacific (which owns part of Ferromex).
Mining on the Cheap
Grupo México’s union-busting and the highly favorable business environment in Mexico (low taxes and few enforced environmental and occupational health regulations) have contributed to the company’s position as a “low cost leader” which has the world’s “lowest cost copper production well below the marginal costs of production.” Its copper mining costs are one-third of Anglo-American and one-half of Freeport McMoRan.
Sources: CNNExpansión, Aug. 27, 2014; “Grupo México to spend $7 billion on mines in the next five years,” Reuters, May 31, 2012; Grupo México at: http://www.gmexico.com/about/where.php#; “Gas Blast Traps 65 Mexican Miners,” Los Angeles Times, February 19, 2006; Southern Copper Company, “Resultados Cuatro Semestre y Año 2013,” 6 de febrero de 2014, at: http://www.southernperu.com/ESP/relinv/INFDLUltimasNotasPrensa/np140206.pdf; Grupo México, Presentation at the Global Metals and Mining Conference, May 11-13, 2010, at: http://www.gmexico.com/pdf/IR-GMexico-Investor-Presentation.pdf; Secretaría de Economía, “Principales Minas,” at: http://www.1economiasonora.gob.mx/principales-mina